Noble Suffers Minor Operational Hiccups; 2013 Outlook Looks Bright

Noble reported decent fourth-quarter earnings, with healthy sequential improvements in revenue and operating income. Contract drilling revenue increased 11% from the third quarter to $922 million while operating income increased 21% over the same time frame to $217 million, thanks to increases in operating days and day rates.

Noble’s operational hiccups marred an otherwise solid performance, as following the addition of three newbuilds to the fleet as well as two other drillships returning to service following major maintenance efforts, the rigs suffered downtime due to certain components (we suspect blowout preventers).

About 33% of Noble’s downtime days in the fourth quarter were related to these five rigs. Furthermore, the Noble Regina Allen has been successfully leveled following an incident at the Jurong shipyard in December 2012 where it tilted following a jacking system test. While there has been no structural damage to the rig, repairs and an investigation into what caused the incident are ongoing, and the rig’s delivery date has been delayed to the third quarter of 2013 from the first quarter of 2013. Overall, Noble has 11 rigs under construction and $2.7 billion in capital expenditures left on its program.

Investors are pleased to see that the company sold two standard jackups for about $79 million during the quarter, as further sales and the ongoing progress on its under construction program will leave Noble with one of the more modern and premium asset bases within the industry, as well as substantially higher levels of earnings power. In a strong ultra-deepwater market, with two newbuilds starting contracts in late 2013, Noble is positioned for a bright 2013.